Wheat Commentary
Sept Chgo wheat closes 8 ¾ cents higher ($4.63 ½), Dec 8 ¼ cents higher ($4.90 ¾) and March 7 ½ cents higher ($5.11 ¼)
Sept KC Wheat closes 7 ¼ cents higher ($4.66 ¾), Dec 7 ¼ cents higher ($4.94 ½) and March 7 cents higher ($5.12 ¼)
Weekly Winter Wheat Progress – 94% harvested vs. 92% expected vs. 92% 5-year average
Weekly Spring Wheat Rating & Progress – 32% GE (+1%) vs. 31% expected vs. 68% year ago – 24% harvested vs. 22% expected vs. 21% 5-year average
The wheat market moved higher on Monday in step with the rest of the Ag sector. It is my thought that most of the buying we saw on Monday was short covering in response to a technical state of oversold. As far as Thursday’s USDA production report is concerned it is going to come down to a lower US crop vs. the rest of the global exporting World. Over the weekend both France and Russia talked about bigger wheat crops. Average trade guesstimates for total US wheat production range from 1.717 billion bu. (Bloomberg) to 1.711 billion bu. (Reuters). These would equate to production drops of 43-49 million bu. It is interesting to note that trade guesstimates have winter wheat declining only by 1 million bu. while the spring wheat estates are declining by 30 to 33 million bu. With this said I’m not sure where the total wheat declines are coming from.
Interior cash wheat markets remain quiet; if anything they’re depressed looking. The wheat export markets are also quiet while depressed looking. Wheat spreads, both Chgo and KC, did show some improvements with today’s flat price rally. I do have to question how much of the spread improvements were tied to the flat price rally as recent export data has not been much to write home about.
Call it what you want – I’ll call it short covering in response to an oversold scenario. I may be out in left field but I believe there is more to come.
Daily Support & Resistance for 08/08
Sept Chgo Wheat: $4.57 – $4.70
Sept KC Wheat: $4.62 – $4.72
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